New Mortgage Rules Make Now the Best Time to Refinance to Consolidate Debt
A few weeks ago, we discussed the current housing market and the fact that it seems to be cooling. This comes, many have argued, as a direct result of the Ontario government’s 16-point Fair Housing Plan. This plan, which attempts to bring about some balance to the housing market, comes on the heels of new mortgage rules introduced last year to help curb over-borrowing.
What are these new mortgage rules? The most important, for borrowers, is with regard to stress testing. This means that borrowers must meet certain thresholds in order to qualify, not only at the current rate, but at higher rates to ensure payments will be met should interest rates increase – as many economists are predicting they will. The other changes have to do with restrictions on insuring low-ratio mortgages, capital gains and lender risk sharing.
Amidst these major changes to borrowing and home ownership, many Canadians are being proactive and arranging for mortgage financing to meet current regulations while the market is still hot. Now is definitely the best time to refinance to consolidate debt.
As of 2012, in order to refinance your mortgage, you need more equity – borrowers may only obtain a maximum loan of 80% of a property’s value. With the market already cooling, this could result in lower home values and thus less equity. With less accessible equity, a refinance that you qualify for today may not be available to you in the future.
If you’ve been considering refinancing your mortgage to consolidate your debt, there are a number of important benefits. Not only will this result in a consolidation of the various monthly payments, it can also significantly reduce the overall interest you are paying each month compared to the high interest rates that often result in minimum credit card payments applying very little to the principal debt. It also means you have a set date for total repayment – you know when you’ll be debt free! It can also have a great impact on your credit report, showing positive repayment behaviour.
So, if you are thinking about refinancing your mortgage while your home’s value is high, don’t wait. Strike while the iron is hot – before Canadian interest rates rise and the housing market cools.
At DebtCare, we can help you choose the best mortgage refinancing option to suit your needs and your budget.
Want to speak to someone today? Call us for a free consultation: 1 (888) 890-0888.